REPRESENTATIVE'S WARRANT AGREEMENT (the "Warrant Agreement"), dated as
of _______ __, 1998, between THE SOURCE INFORMATION MANAGEMENT COMPANY, a
Missouri corporation (the "Company"), and ▇▇▇▇▇▇ & CO. SECURITIES INC.
(hereinafter referred to variously as the "Holder" or the "Representative").
The Company proposes to issue to the Representative warrants (the
"Warrants") to purchase up to 200,000 shares of the Company's common stock, par
value $.01 per share (the "Common Stock");
The Representative has agreed, pursuant to the underwriting agreement
(the "Underwriting Agreement") dated ______ __, 1998 among the Company, the
Representative and the other underwriters named in Schedule II thereof
(collectively with the Representative, the "Underwriters") to act as the
representative of the Underwriters in connection with the Company's proposed
public offering (the "Public Offering") of 2,000,000 shares of Common Stock (the
"Stock") at an initial public offering price of $____ per share; and
The Warrants to be issued pursuant to this Agreement will be issued on
the Closing Date (as such term is defined in the Underwriting Agreement) by the
Company to the Representative in consideration for, and as part of the
compensation in connection with, the Representative acting as representative of
the Underwriters pursuant to the Underwriting Agreement;
NOW, THEREFORE, in consideration of the premises, the payment by the
Representative to the Company of TWO HUNDRED DOLLARS AND NO CENTS ($200.00), the
agreements herein set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Grant. The Holder (as hereinafter defined) is hereby granted the
right to purchase, at any time from __________ __, 1999 until 5:00 p.m., St.
Louis, Missouri time, on _______ __, 2003, up to 200,000 shares of Common Stock
(the "Warrant Stock") at an initial exercise price (subject to adjustment as
provided in Article 8 hereof) of $____ per share of Warrant Stock, subject to
the terms and conditions of this Agreement.
2. Warrant Certificates. The warrant certificates (the "Warrant
Certificates") delivered and to be delivered pursuant to this Agreement shall be
in the form set forth in Exhibit A, attached hereto and made a part hereof, with
such appropriate insertions, omissions, substitutions, and other variations as
required or permitted by this Agreement.
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3. Exercise of Warrant. The Warrants initially are exercisable at the
initial exercise price per share of Warrant Stock set forth in Section 6 hereof,
payable by wire transfer, or certified or official bank check (or by cashless
exercise as provided below), subject to adjustment as provided in Section 8
hereof. Upon surrender of a Warrant Certificate with the annexed Form of
Election to Purchase duly executed, together with payment of the Exercise Price
(as hereinafter defined) for the Warrant Stock purchased at the Company's
principal offices (presently located at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇) the registered holder of a Warrant Certificate ("Holder" or
"Holders") shall be entitled to receive a certificate or certificates for the
shares of Warrant Stock so purchased. The purchase rights represented by each
Warrant Certificate are exercisable at the option of the Holder thereof, in
whole or in part (but not as to fractional shares of the Warrant Stock
underlying the Warrants). In the case of the purchase of less than all the
securities purchasable under any Warrant Certificate, the Company shall cancel
said Warrant Certificate upon the surrender thereof and shall execute and
deliver a new Warrant Certificate of like tenor for the balance of the
securities purchasable thereunder.
The Holder may, at its option, exchange the Warrants, in whole or in
part (a "Warrant Exchange"), into the number of shares of Warrant Stock
determined in accordance with this paragraph, by surrendering the Warrant
Certificate representing the Warrants at the Company's principal office,
accompanied by a notice stating (i) such Holder's intent to effect such
exchange, (ii) the number of shares of Warrant Stock subject to the Warrants as
to which the exchange is to be effected and (iii) the date on which the Holder
requests that such Warrant Exchange occur (the "Notice of Exchange"). The
Warrant Exchange shall take place on the date specified in the Notice of
Exchange or if the date the Notice of Exchange is received by the Company is
later than three (3) business days prior to the date specified in the Notice of
Exchange, the date which is three (3) business days after the date of receipt
(the "Exchange Date"). Certificates for the shares of Warrant Stock issuable
upon such Warrant Exchange and, if applicable, a new warrant of like tenor
evidencing the balance of the shares of Warrant Stock remaining subject to the
Warrants, shall be issued as of the Exchange Date and delivered to the Holder
within three (3) business days following the Exchange Date. In connection with
any Warrant Exchange, the Warrants shall represent the right to subscribe for
and acquire the number of shares of Warrant Stock (rounded to the next highest
integer) equal to (i) the number of shares of Warrant Stock specified by the
Holder in its Notice of Exchange (the "Total Number") less (ii) the number of
shares of Warrant Stock equal to the quotient obtained by dividing (A) the
product of the Total Number and the existing Exercise Price of the Warrants by
(B) the average market price of a share of Common Stock for the ten (10) trading
days ending on the Exchange Date; and, in the case of any Warrant Exchange for
less than all of the shares of Warrant Stock purchasable under the Warrants, the
Company shall execute and deliver a new Warrant Certificate of like tenor for
the balance of the Shares purchasable thereunder. By way of example, if a Holder
of Warrants submits a Notice of Exchange relating to 60,000 of the 200,000
shares of Warrant Stock subject to the Warrants and the current average market
price of a share of Common Stock for the ten trading day period ending on the
Exchange Date is $8.00, the holder will be entitled to receive 24,000 shares of
Warrant Stock, along with a new Warrant Certificate entitling the Holder to
purchase 140,000 shares of Warrant Stock.
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4. Issuance of Certificates. Upon the exercise of the Warrants, the
issuance of certificates for the shares of Warrant Stock or other securities,
properties or rights underlying such Warrants, shall be made forthwith (and in
any event within five (5) business days thereafter) without charge to the Holder
thereof including, without limitation, any tax which may be payable in respect
of the issuance thereof, and such certificates shall (subject to the provisions
of Sections 5 and 7 hereof) be issued in the name of, or in such names as may be
directed by, the Holder thereof; provided, however, that the Company shall not
be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any such certificates in a name other
than that of the Holder and the Company shall not be required to issue or
deliver such certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
The Warrant Certificates and the certificates representing the shares
of Warrant Stock or other securities, property or rights shall be executed on
behalf of the Company by the manual or facsimile signature of the Chairman of
the Board of Directors, or the President or any executive officer of the Company
under its corporate seal reproduced thereon, attested to by the manual or
facsimile signature of the Treasurer or Assistant Treasurer or the Secretary or
Assistant Secretary of the Company. Warrant Certificates shall be dated the date
of execution by the Company upon initial issuance, division, exchange,
substitution or transfer.
5. Restriction On Transfer of Warrants. The Holder of a Warrant
Certificate, by its acceptance thereof, covenants and agrees that the Warrants
may not be sold, transferred, assigned, hypothecated or otherwise disposed of,
in whole or in part, except to officers and directors of the Representative.
6. Exercise Price.
6.1 Initial and Adjusted Exercise Price. The initial exercise price of
each Warrant shall be $____ per share of Warrant Stock. The adjusted exercise
price shall be the price which shall result from time to time from any and all
adjustments of the initial exercise price in accordance with the provisions of
Section 8 hereof.
6.2 Exercise Price. The term "Exercise Price" herein shall mean the
initial exercise price or the adjusted exercise price, depending upon the
context.
7. Registration Rights.
7.1 Registration Under the Securities Act of 1933. The Warrants and the
shares of Warrant Stock have been registered under the Securities Act of 1933,
as amended (the "Securities Act"). Upon exercise, in part or in whole, of the
Warrants, certificates representing the shares of Warrant Stock and any other
securities issuable upon exercise of the Warrants (collectively, the "Warrant
Securities") shall bear the following legend:
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The securities represented by this certificate may not be
offered or sold except pursuant to (i) an effective
registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), (ii) to the extent applicable,
Rule 144 under the Securities Act (or any similar rule under
the Securities Act relating to the disposition of securities),
or (iii) an opinion of counsel, if such opinion shall be
reasonably satisfactory to counsel for the issuer, that an
exemption from registration under the Securities Act is
available.
7.2 Piggyback Registration. If, at any time commencing on _____ __,
1998 and expiring six (6) years thereafter, the Company proposes to register any
of its securities under the Securities Act (other than in connection with a
transaction contemplated by Rule 145(a) promulgated under the Securities Act or
pursuant to Form ▇-▇, ▇▇▇▇ ▇-▇ or any successor form thereto), it will give
written notice by registered or certified mail at least twelve (12) business
days prior to the filing of each such registration statement, to all Holders of
the Warrants and/or Warrant Securities of its intention to do so. If the Holders
of the Warrants and/or Warrant Securities notify the Company in writing not more
than ten (10) business days after receipt of such notice of their desire to
include any such securities in such proposed registration statement, the Company
shall afford such Holders of the Warrants and/or Warrant Securities the
opportunity to have any such Warrant Securities registered under such
registration statement. Notwithstanding the provisions of this Section 7.2, the
Company shall have the right at any time after it shall have given written
notice pursuant to this Section 7.2 (irrespective of whether a written request
for inclusion of any such securities shall have been made) to elect not to file
any such proposed registration statement, or to withdraw the same after the
filing but prior to the effective date thereof. Furthermore, if the managing
underwriter of any such offering shall advise the Company in writing that, in
its opinion, the distribution of all or a portion of the Warrant Securities
requested to be included in the registration statement concurrently with the
securities being registered by the Company would materially and adversely affect
the distribution of such securities by the Company for its own account, then the
Warrant Securities shall nevertheless be included in such registration statement
but withheld from the market for a period not to exceed sixty (60) days, which
period the managing underwriter reasonably determines as necessary in order to
effect the underwritten public offering.
7.3 Demand Registration.
(a) At any time commencing on ______ __, 1999 and
expiring four (4) years thereafter, the Holders of Warrants
and/or Warrant Securities representing more than 50% of such
securities at that time outstanding (assuming the exercise of
all of the Warrants), shall have the right (which right is in
addition to the registration rights under Section 7.2 hereof),
exercisable by written notice to the Company, to have the
Company prepare and file with the Securities and Exchange
Commission, on two occasions, a registration statement and
such other documents, including a prospectus, as may be
necessary in the opinion of both counsel for the Company and
counsel for the Representative and Holders in order to comply
with the provisions of the Securities Act, so as to permit a
public offering and sale of their respective Warrant
Securities for nine (9) consecutive months by such Holders and
any other Holders of the Warrants and/or Warrant Securities
who notify the Company within ten (10) business days after
receiving notice from the Company of such request.
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(b) The Company covenants and agrees to give written
notice of any registration request under this Section 7.3 by
the majority of the Holders to all other registered Holders of
the Warrants and the Warrant Securities within ten (10)
business days from the date of the receipt of any such
registration request.
(c) In addition to the registration rights under
Section 7.2 and subsection (a) of this Section 7.3, at any
time commencing on ______ __, 1999 and expiring four (4) years
thereafter, the Holders of Warrants and/or Warrant Securities
representing more than 50% of such securities at the time
outstanding (assuming the exercise of all of the Warrants)
shall have the right, exercisable by written request to the
Company, to have the Company prepare and file, on one
occasion, with the Commission a registration statement so as
to permit a public offering and sale for nine (9) consecutive
months by any such Holders of their Warrant Securities;
provided, however, that the provisions of Section 7.5(b)
hereof shall not apply to any such registration request and
registration and all costs incident thereto shall be at the
expense of the Holder or Holders making such request.
7.4 Covenants of the Company With Respect to
Registration. In connection with any registration under Section 7.2 or 7.3
hereof, the Company covenants and agrees as follows:
(a) The Company shall file a registration statement as
promptly as practicable after receipt of any demand pursuant
to Section 7.3, but in no event later than forty-five (45)
days after receipt of such demand, and shall use its best
efforts to have any registration statements declared effective
at the earliest practicable time, and shall furnish each
Holder desiring to sell Warrant Securities such number of
prospectuses as shall reasonably be requested. Notwithstanding
the foregoing sentence, the Company shall not be obligated to
file a registration statement pursuant to Section 7.3 (i)
during the period when the Warrant Securities are withheld
from the market as set forth in Section 7.2 and (ii) if any
demand pursuant to Section 7.3 is made within ninety (90) days
following the fiscal year end of the Company when the
conditions set forth in Rule 3-01(c) of Regulation S-X are not
met for filings made after forty-five (45) days but within
ninety (90) days of the end of the Company's final year. Upon
the occurrence of the event set forth in Section 7.4(a)(i),
the Company shall file the registration statement as promptly
as practicable after the conclusion of the period when the
Warrant Securities were withheld from the market, but in no
event later than forty-five (45) days after the conclusion of
such period. Upon the occurrence of the event set forth in
Section 7.4(a)(ii), the Company shall file the registration
statement as promptly as practicable after the earlier of the
date when the Company files its annual report on Form 10-K or
10-KSB with the Securities and Exchange Commission or ninety
days (90) days following the fiscal year end of the Company,
but in no event later than forty-five (45) days after the
earlier of such dates.
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(b) The Company shall pay all costs (excluding
transfer taxes, if any, and fees and expenses of Holder(s)'
counsel and any underwriting or selling commissions), fees and
expenses in connection with the first registration statement
filed pursuant to Sections 7.2 and 7.3(a) hereof including,
without limitation, the Company's legal and accounting fees,
printing expenses, blue sky fees and expenses. The Holder(s)
will pay all costs, fees and expenses in connection with any
registration statement filed pursuant to Section 7.3(c). If
the Company shall fail to comply with the provisions of
Section 7.4(a), the Company shall, in addition to any other
equitable or other damages or relief available to the
Holder(s), be liable for any and all incidental, special and
consequential damages and damages due to loss of profit
sustained by the Holder(s) requesting registration of their
Warrant Securities.
(c) The Company shall use its best efforts to qualify
or register the Warrant Securities included in a registration
statement for offering and sale under the securities or blue
sky laws of such states as reasonably are requested by the
Holder(s), provided that the Company shall not be obligated to
execute or file any general consent to service of process or
to qualify as a foreign corporation to do business under the
laws of any such jurisdiction, and further provided that if
any jurisdiction in which the Warrant Securities shall be
qualified shall require that expenses incurred in connection
with the qualification of the securities in that jurisdiction
shall be borne by selling stockholders, then such expenses
shall be payable by the selling stockholders pro rata to the
extent required by such jurisdiction.
(d) To the extent permitted by law, the Company shall
indemnify the Holder(s) of the Warrant Securities to be sold
pursuant to any registration statement and each person, if
any, who controls such Holders within the meaning of Section
15 of the Securities Act or Section 20(a) of the Exchange Act
against all loss, claim, damage, expense or liability
(including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which
any of them may become subject under the Securities Act, the
Exchange Act or otherwise, arising from such registration
statement but only to the same extent and with the same effect
as the provisions contained in Section 8 of the Underwriting
Agreement pursuant to which the Company has agreed to
indemnify the Underwriters.
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(e) The Company shall not require the Holder(s) to
exercise their Warrants prior to the initial filing of any
registration statement or the effectiveness thereof.
(f) The Company shall not permit the inclusion of any
securities other than the Warrant Securities to be included in
the registration statement filed pursuant to Section 7.3(a)
hereof, without the prior written consent of the
Representative.
(g) The Company shall furnish to the Representative
on behalf of each Holder participating in the offering and to
the managing underwriter, if any, a signed counterpart,
addressed to the Representative on behalf on each Holder and
to the managing underwriter, if any, (i) an opinion of counsel
to the Company, dated the effective date of such registration
statement if there is no managing underwriter or the date of
the closing under the underwriting agreement if there is a
managing underwriter, and (ii) a "cold comfort" letter, dated
the effective date of such registration statement and the date
of the closing under the underwriting agreement if there is a
managing underwriter, signed by the independent public
accountants who have issued a report on the Company's
financial statements included in such registration statement,
in each case covering substantially the same matters with
respect to such registration statement (and the prospectus
included therein) and, in the case of such accountants'
letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions
of issuer's counsel and in accountants' letters delivered to
underwriters in underwritten public offerings of securities.
(h) The Company shall as soon as practicable after
the effective date of the registration statement, and in any
event within 15 months thereafter, make "generally available
to its security holders" (within the meaning of Rule 158 under
the Securities Act) an earnings statement (which need not be
audited) complying with Section 11(a) of the Securities Act
and covering a period of at least 12 consecutive months
beginning after the effective date of the registration
statement.
(i) The Company shall deliver promptly to each Holder who
so requests and the managing underwriter, if any, copies of
all correspondence between the Commission and the Company, its
counsel or auditors and all memoranda relating to discussions
with the Commission or its staff with respect to any
registration statement filed pursuant to this Agreement, and
permit each Holder who so requests and the managing
underwriter, if any, to do such investigation, upon reasonable
advance notice, with respect to information contained in or
omitted from the registration statement as it deems reasonably
necessary to comply with applicable securities laws or rules
of the National Association of Securities Dealers, Inc.
("NASD"). Such investigation shall include access to books,
records and properties and opportunities to discuss the
business of the Company with its officers and independent
auditors, all to such reasonable extent and at such reasonable
times and as often as each Holder and the managing
underwriter, if any, shall reasonably request.
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(j) With respect to a registration statement filed
pursuant to Section 7.3, the Company shall enter into an
underwriting agreement with the managing underwriter,
reasonably satisfactory to the Company, selected for such
underwriting by Holders holding a majority of the Warrant
Securities requested to be included in such underwriting. Such
agreement shall be satisfactory in form and substance to the
Company, each Holder and such managing underwriters, and shall
contain such representations, warranties and covenants by the
Company and such other terms as are customarily contained in
agreements of that type used by the managing underwriter. The
Holders shall be parties to any underwriting agreement
relating to an underwritten sale of their Warrant Securities
and may, at their option, require that any or all of the
representations, warranties and covenants of the Company to or
for the benefit of such underwriters shall also be made to and
for the benefit of such Holders. Such Holders shall not be
required to make any representations or warranties to or
agreements with the Company or the underwriters except as they
may relate to such Holders and their intended methods of
distribution.
7.6 Covenants of the Holder(s) With Respect to
Registration. The Holder(s) of the Warrant Securities to be sold pursuant to a
registration statement, and their successors and assigns, shall severally, and
not jointly, indemnify the Company, its officers and directors and each person,
if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act, against all loss, claim,
damage or expense or liability (including all expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to which
they may become subject under the Securities Act, the Exchange Act or otherwise,
arising from information furnished by or on behalf of such Holders, or their
successors or assigns, for specific inclusion in such registration statement to
the same extent and with the same effect as the provisions contained in Section
8 of the Underwriting Agreement pursuant to which the Underwriters have agreed
to indemnify the Company.
7.7 Agreement by Holder to Participate in Registration.
Notwithstanding anything to the contrary contained herein, no Holder shall have
any rights under this Section 7 unless such Holder (i) shall furnish to the
Company information concerning the number of Warrant Securities held by him and
the intended method of disposition of such Warrant Securities, (ii) executes a
written agreement stating that the information set forth in the registration
statement concerning the Holder is correct and that the Holder will not violate
Regulation M promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and (iii) delivers such written agreement (as executed by
such Holder) to the Company within 20 days after the Company delivers the form
of such written agreement to such Holder.
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8. Adjustments to Exercise Price and Number of Securities.
8.1 Computation of Adjusted Exercise Price. In case the
Company shall at any time after the date hereof issue or sell any shares of
Common Stock (other than the issuances or sales referred to in Section 8.7
hereof), including shares held in the Company's treasury and shares of Common
Stock issued upon the exercise of any options, rights or warrants to subscribe
for shares of Common Stock and shares of Common Stock issued upon the direct or
indirect conversion or exchange of securities for shares of Common Stock, for a
consideration per share less than the "Exercise Price" on the date immediately
prior to the issuance or sale of such shares, or without consideration, then
forthwith upon such issuance or sale, the Exercise Price shall (until another
such issuance or sale) be reduced to the price (calculated to the nearest full
cent) equal to the quotient derived by dividing (A) an amount equal to the sum
of (X) the product of (a) the Exercise Price on the date immediately prior to
the issuance or sale of such shares, multiplied by (b) the total number of
shares of Common Stock outstanding immediately prior to such issuance or sale
plus, (Y) the aggregate of the amount of all consideration, if any, received by
the Company upon such issuance or sale, by (B) the total number of shares of
Common Stock outstanding immediately after such issuance or sale; provided,
however, that in no event shall the Exercise Price be adjusted pursuant to this
computation to an amount in excess of the Exercise Price in effect immediately
prior to such computation, except in the case of a combination of outstanding
shares of Common Stock, as provided by Section 8.3 hereof.
For the purposes of any computation to be made in accordance
with this Section 8.1, the following provisions shall be applicable:
(i) In case of the issuance or sale of shares of
Common Stock for a consideration part or all of which shall be
cash, the amount of cash consideration therefor shall be
deemed to be the amount of cash received by the Company for
such shares (or, if shares of Common Stock are offered by the
Company for subscription, the subscription price, or if either
of such securities shall be sold to underwriters or dealers
for public offering without a subscription offering, the
initial public offering price) before deducting therefrom any
compensation paid or discount allowed in the sale,
underwriting or purchase thereof by underwriters or dealers or
others performing similar services, or any expenses incurred
in connection therewith.
(ii) In case of the issuance or sale (otherwise than
as a dividend or other distribution on any stock of the
Company) of shares of Common Stock for a consideration part or
all of which shall be other than cash, the amount of the
consideration therefor other than cash shall be deemed to be
the value of such consideration as determined in good faith by
the Board of Directors of the Company.
(iii) Shares of Common Stock issuable by way of
dividend or other distribution on any stock of the Company
shall be deemed to have been issued immediately after the
opening of business on the day following the record date for
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the determination of stockholders entitled to receive such
dividend or other distribution and shall be deemed to have
been issued without consideration.
(iv) The reclassification of securities of the
Company other than shares of the Common Stock into securities
including shares of Common Stock shall be deemed to involve
the issuance of such shares of Common Stock for a
consideration other than cash immediately prior to the close
of business on the date fixed for the determination of
security holders entitled to receive such shares, and the
value of the consideration allocable to such shares of Common
Stock shall be determined as provided in subsection (ii) of
this Section 8.1.
(v) The number of shares of Common Stock at any one
time outstanding shall include the aggregate number of shares
issued or issuable (subject to readjustment upon the actual
issuance thereof) upon the exercise of options, rights,
warrants and upon the conversion or exchange of convertible or
exchangeable securities; provided, however, that shares
issuable upon the exercise of the Warrants shall not be
included in such calculation.
8.2 Options, Rights, Warrants and Convertible and
Exchangeable Securities. In case the Company shall at any time after the date
hereof issue options, rights or warrants to subscribe for shares of Common
Stock, or issue any securities convertible into or exchangeable for shares of
Common Stock, for a consideration per share less than the Exercise Price
immediately prior to the issuance of such options, rights or warrants, or such
convertible or exchangeable securities, or without consideration, the Exercise
Price in effect immediately prior to the issuance of such options, rights or
warrants, or such convertible or exchangeable securities, as the case may be,
shall be reduced to a price determined by making a computation in accordance
with the provision of Section 8.1 hereof, provided that:
(a) The aggregate maximum number of shares of Common
Stock, as the case may be, issuable under such options, rights
or warrants shall be deemed to be issued and outstanding at
the time such options, rights or warranties were issued, and
for a consideration equal to the minimum purchase price per
share provided for in such options, rights or warrants at the
time of issuance, plus the consideration (determined in the
same manner as consideration received on the issue or sale of
shares in accordance with the terms of the Warrants), if any,
received by the Company for such options, rights or warrants.
(b) The aggregate maximum number of shares of Common
Stock issuable upon conversation or exchange of any
convertible or exchangeable securities shall be deemed to be
issued and outstanding at the time of issuance of such
securities, and for a consideration equal to the consideration
(determined in the same manner as consideration received on
the issue or sale of shares of Common Stock in accordance with
the terms of the Warrants) received by the Company for such
securities, plus the minimum consideration, if any, receivable
by the Company upon the conversion or exchange thereof.
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(c) If any change shall occur in the price per share
provided for in any of the options, rights or warrants
referred to in subsection (a) of this Section 8.2, or in the
price per share at which the securities referred to in
subsection (b) of this Section 8.2 are convertible or
exchangeable, such options, rights or warrants or conversion
or exchange rights, as the case may be, shall be deemed to
have expired or terminated on the date when such price change
became effective in respect of shares not theretofore issued
pursuant to the exercise or conversation or exchange thereof,
and the Company shall be deemed to have issued upon such date
new options, rights or warrants or convertible or exchangeable
securities at the new price in respect of the number of shares
issuable upon the exercise of such options, rights or warrants
or the conversion or exchange of such convertible or
exchangeable securities.
(d) If any options, rights or warrants referred to in
subsection (a) of this Section 8.2, or any convertible or
exchangeable securities referred to in subsection (b) of this
Section 8.2, expire or terminate without exercise or
conversion, as the case may be, then the Exercise Price of the
remaining outstanding Warrants shall be readjusted as if such
options, rights or warrants or convertible or exchangeable
securities, as the case may be, had never been issued.
8.3 Subdivision and Combination. In case the Company
shall at any time subdivide or combine the outstanding shares of Common Stock,
the Exercise Price shall forthwith be proportionately decreased in the case of
subdivision or increased in the case of combination.
8.4 Adjustment in Number of Securities. Upon each
adjustment of the Exercise Price pursuant to the provisions of this Section 8,
the number of shares of Warrant Stock issuable upon the exercise of each Warrant
shall be adjusted to the nearest full amount by multiplying a number equal to
the Exercise Price in effect immediately prior to such adjustment by the number
of shares of Warrant Stock issuable upon exercise of the Warrants immediately
prior to such adjustment and dividing the product so obtained by the adjusted
Exercise Price.
8.5 Definition of Common Stock. For the purpose of this
Agreement, the term "Common Stock" shall mean (i) the class of stock designated
as Common Stock in the Certificate of Incorporation of the Company as it may be
amended as of the date hereof, or (ii) any other class of stock resulting from
successive changes or reclassifications of such Common Stock consisting solely
of changes in par value, or from par value to no par value, or from no par value
to par value.
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8.6 Merger or Consolidation. In case of any consolidation
of the Company with, or merger of the Company with, or merger of the Company
into, another corporation (other than a consolidation or merger which does not
result in any reclassification or change of the outstanding Common Stock), the
corporation formed by such consolidation or merger shall execute and deliver to
the Holder a supplemental warrant agreement providing that the Holder of each
Warrant then outstanding or to be outstanding shall have the right thereafter
(until the expiration of such Warrant) to receive, upon exercise of such
Warrant, the kind and amount of shares of stock and other securities and
property receivable upon such consolidation or merger, by a holder of the number
of shares of Common Stock of the Company for which such warrant might have been
exercised immediately prior to such consolidation, merger, sale or transfer.
Such supplemental warrant agreement shall provide for adjustments which shall be
identical to the adjustments provided in Section 8. The above provision of this
Subsection shall similarly apply to successive consolidations or mergers.
8.7 No Adjustment of Exercise Price in Certain Cases. No
adjustment of the Exercise Price shall be made:
(a) Upon the issuance or sale of the
Warrants, the shares of Warrant Stock issuable upon the
exercise of the Warrants or shares of Common Stock issuable
upon exercise of options outstanding on the date hereof and
described in the prospectus relating to the Public Offering;
(b) Upon the issuance or sale of shares of
Common Stock upon the exercise of options, rights or warrants,
or upon the conversion or exchange of convertible or
exchangeable securities, in any case where the Exercise Price
was adjusted at the time of issuance of such options, rights
or warrants, or convertible or exchangeable securities, as
contemplated by Section 8.2 hereof;
(c) Upon the issuance of any shares of
Common Stock pursuant to the Company's Stock Award Plan
described in the prospectus relating to the Public Offering,
if the value attributable to such shares is equal to or
greater than the market value of the Common Stock (based on
the last sales price of the Common Stock on the date of
issuance of such shares);
(d) Upon the grant of options pursuant to
the Company's 1995 Incentive Stock option Plan described in
the prospectus relating to the Public Offering, if the
exercise price of such options is equal to or greater than the
market value of the Common Stock (based on the last sales
price of the Common Stock on the date of grant of such
options);
(e) Upon the issuance to a non-employee director
of the Company as compensation for attendance at a Board of
Directors meeting of shares of Common Stock having a market
value (based on the last sales price on the date of the
meeting) no greater than $1,000; or
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(f) If the amount of said adjustment shall
be less than 2 cents ($.02) per share of Warrant Stock;
provided, however, that in such case any adjustment that would
otherwise be required then to be made shall be carried forward
and shall be made at the time of and together with the next
subsequent adjustment which, together with any adjustment so
carried forward, shall amount to at least 2 cents ($.02) per
share of Warrant Stock.
8.8 Dividends and Other Distributions. In the event that
the Company shall at any time prior to the exercise of all Warrants declare a
dividend (other than a dividend consisting solely of shares of Common Stock) or
otherwise distribute to its stockholders any assets, property, rights, evidences
of indebtedness, securities (other than shares of Common Stock), whether issued
by the Company or by another, or any other thing of value, the Holders of the
unexercised Warrants shall thereafter be entitled, in addition to the shares of
Common Stock or other securities and property receivable upon the exercise
thereof, to receive, upon the exercise of such Warrants, the same property,
assets, rights, evidences of indebtedness, securities or any other thing of
value that they would have been entitled to receive at the time of such dividend
or distribution as if the Warrants had been exercised immediately prior to such
dividend or distribution. At the time of any such dividend or distribution, the
Company shall make appropriate reserves to ensure the timely performance of the
provisions of this subsection 8.5. Nothing contained herein shall provide for
the receipt or accrual by a Holder of cash dividends prior to the exercise by
such Holder of the Warrants.
9. Exchange and Replacement of Warrant Certificates. Each
Warrant Certificate is exchangeable without expense, upon the surrender thereof
by the registered Holder at the principal executive office of the Company, for a
new Warrant Certificate of like tenor and date representing in the aggregate the
right to purchase the same number of shares of Warrant Stock in such
denominations as shall be designated by the Holder thereof at the time of such
surrender.
Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of any Warrant
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it, and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
the Warrants, if mutilated, the Company will make and deliver a new Warrant
Certificate of like tenor, in lieu thereof.
10. Elimination of Fractional Interests. The Company shall not
be required to issue certificates representing fractions of shares of Warrant
Stock upon the exercise of the Warrants, nor shall it be required to issue scrip
or pay cash in lieu of fractional interests, it being the intent of the parties
that all fractional interests shall be eliminated by rounding any fraction up to
the nearest whole number of shares of Warrant Stock or other securities,
properties or rights.
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11. Reservation and Listing. The Company shall at all times
reserve and keep available out of its authorized shares of Common Stock, solely
for the purpose of issuance upon the exercise of the Warrants, such number of
shares of Warrant Stock or other securities, properties or rights as shall be
issuable upon the exercise thereof. The Company covenants and agrees that, upon
exercise of the Warrants and payment of the Exercise Price therefor, all shares
of Warrant Stock and other securities issuable upon such exercise shall be duly
and validly issued, fully paid, non-assessable and not subject to the preemptive
rights of any stockholder. As long as the Warrants shall be outstanding, the
Company shall use its best efforts to cause all shares of Warrant Stock issuable
upon the exercise of the Warrants to be listed (subject to official notice of
issuance) on all securities exchanges on which the Common Stock issued to the
public in connection herewith may then be listed and/or quoted on The Nasdaq
Stock Market.
12. Notices to Warrant Holders. Nothing contained in this
Agreement shall be construed as conferring upon the Holders the right to vote or
to consent or to receive notice as a stockholder in respect of any meetings of
stockholders for the election of directors or any other matter, or as having any
rights whatsoever as a stockholder of the Company. If, however, at any time
prior to the expiration of the Warrants and their exercise, any of the following
events shall occur:
(a) the Company shall take a record of the holders of
its shares of Common Stock for the purpose of entitling them
to receive a dividend or distribution payable otherwise than
in cash, or a cash dividend or distribution payable otherwise
than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the
books of the Company; or
(b) the Company shall offer to all the holders of its
Common Stock any additional shares of capital stock of the
Company or securities convertible into or exchangeable for
shares of capital stock of the Company, or any option, right
or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation or
merger) or a sale of all or substantially all of its property,
assets and business as an entirety shall be proposed;
then, in any one or more of said events, the Company shall give written notice
of such event at least fifteen (15) days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
stockholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, or entitled to vote on such
proposed dissolution, liquidation, winding up or sale. Such notice shall specify
such record date or the date of closing the transfer books, as the case may be.
Failure to give such notice or any defect therein shall not affect the validity
of any action taken in connection with the declaration or payment of any such
dividend, or the issuance of any convertible or exchangeable securities, or
subscription rights, options or warrants, or any proposed dissolution,
liquidation, winding up or sale.
14
13. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
duly made when delivered, or mailed by registered or certified mail, return
receipt requested:
(a) If to the registered Holder of the Warrants, to
the address of such Holder as shown on the books of the
Company; or
(b) If to the Company, to the address set forth in
Section 3 hereof or to such other address as the Company may
designate by notice to the Holders.
14. Supplements and Amendments. The Company and the
Representative may from time to time supplement or amend this Agreement without
the approval of any Holders of Warrant Certificates (other than the
Representative) in order to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent with any
provisions herein, or to make any other provisions in regard to matters or
questions arising hereunder which the Company and the Representative may deem
necessary or desirable and which the Company and the Representative deem shall
not adversely affect the interests of the Holders of Warrant Certificates.
15. Successors. All the covenants and provisions of this
Agreement shall be binding upon and inure to the benefit of the Company, the
Holders and their respective successors and assigns hereunder.
16. Termination. This Agreement shall terminate at the close
of business on _______ __, 2005. Notwithstanding the foregoing, the
indemnification provisions of Section 7 shall survive such termination until the
close of business on _______ __, 2008.
17. Governing Law; Submission to Jurisdiction. This Agreement
and each Warrant Certificate issued hereunder shall be deemed to be a contract
made under the laws of the State of New York and for all purposes shall be
construed in accordance with the laws of said State without giving effect to the
rules of said State governing the conflicts of laws. The Company, the
Representative and the Holders hereby agree that any action, proceeding or claim
against it arising out of, or relating in any way to, this Agreement shall be
brought and enforced in the courts of the State of New York or of the United
States District Court for the Southern District of New York, and irrevocably
submits to such jurisdiction, which jurisdiction shall be exclusive. The
Company, the Representative and the Holders hereby irrevocably waive any
objection to such exclusive jurisdiction or inconvenient forum. Any such process
or summons to be served upon any of the Company, the Representative and the
Holders (at the option of the party bringing such action, proceeding or claim)
may be served by transmitting a copy thereof, by registered or certified mail,
return receipt requested, postage prepaid, addressed to it at the address set
forth in Section 13 hereof. Such mailing shall be deemed personal service and
shall be legal and binding upon the party so served in any action, proceeding or
claim. The Company, the Representative and the Holders agree that the prevailing
party(ies) in any such action or proceeding shall be entitled to recover from
the other part(ies) all of its/their reasonable legal costs and expenses
relating to such action or proceeding and/or incurred in connection with the
preparation therefor.
15
18. Entire Agreement; Modification. This Agreement (including
the Underwriting Agreement to the extent portions thereof are referred to
herein) contains the entire understanding between the parties hereto with
respect to the subject matter hereof and may not be modified or amended except
by a writing duly signed by the party against whom enforcement of the
modification or amendment is sought.
19. Severability. If any provision of this Agreement shall be
held to be invalid or unenforceable, such invalidity or unenforceability shall
not affect any other provision of this Agreement.
20. Captions. The caption headings of the Sections of this
Agreement are for convenience of reference only and are not intended, nor should
they be construed as, a part of this Agreement and shall be given no substantive
effect.
21. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company
and the Representative and any other registered Holder(s) of the Warrant
Certificates or Warrant Securities any legal or equitable right, remedy or claim
under this Agreement; and this Agreement shall be for the sole and exclusive
benefit of the Company and the Representative and any other Holder(s) of the
Warrant Certificates or Warrant Securities.
22. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and such counterparts shall together constitute but one and
the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above written.
THE SOURCE INFORMATION MANAGEMENT COMPANY
By:_______________________________________
Name: S. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
Attest:
______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Assistant Secretary
▇▇▇▇▇▇ & CO. SECURITIES INC.
By:___________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
16
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE
SECURITIES ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION
OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE
REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT
AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., ST. LOUIS TIME, ________ __, 2003
No. W- _________ Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that ________, or registered
assigns, is the registered holder of _____________ Warrants to purchase
initially, at any time from ______ __, 1999 until 5:00 P.M. St. Louis, Missouri
time on ______ __, 2003 ("Expiration Date"), up to _________ fully paid and
non-assessable shares of common stock, $.01 par value ("Common Stock"), of THE
SOURCE INFORMATION MANAGEMENT COMPANY, a Missouri corporation (the "Company"),
at the initial exercise price, subject to adjustment in certain events (the
"Exercise Price"), of $____ per share, upon surrender of this Warrant
Certificate and payment of the Exercise Price at an office or agency of the
Company, but subject to the conditions set forth herein and in the
Representative's Warrant Agreement dated as of ______ __, 1998 between the
Company and ▇▇▇▇▇▇ & Co. Securities Inc. (the "Representative's Warrant
Agreement"). Payment of the Exercise Price shall be made by wire transfer, or
certified or official bank check payable to the order of the Company.
1
No Warrant may be exercised after 5:00 p.m., St. Louis,
Missouri time, on the Expiration Date, at which time all Warrants evidenced
hereby, unless exercised prior thereto, hereby shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of Warrants issued pursuant to the Representative's
Warrant Agreement, which Representative's Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and is hereby
referred to for a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of the Company and the holders (the words
"holders" or "holder" meaning the registered holders or registered holder) of
the Warrants.
The Representative's Warrant Agreement provides that upon the
occurrence of certain events the Exercise Price and the type and/or number of
the Company's securities issuable thereupon may, subject to certain conditions,
be adjusted. In such event, the Company will, at the request of the holder,
issue a new Warrant Certificate evidencing the adjustment in the Exercise Price
and the number and/or type of securities issuable upon the exercise of the
Warrants; provided, however, that the failure of the Company to issue such new
Warrant Certificates shall not in any way change, alter, or otherwise impair,
the rights of the holder as set forth in the Representative's Warrant Agreement.
Upon due presentment for registration of transfer of this
Warrant Certificate at an office or agency of the Company, a new Warrant
Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued to the transferee(s) in
exchange for this Warrant Certificate, subject to the limitations provided
herein and in the Representative's Warrant Agreement, without any charge except
for any tax or other governmental charge imposed in connection with such
transfer.
Upon the exercise of less than all of the Warrants evidenced
by this Certificate, the Company shall forthwith issue to the holder hereof a
new Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof
as the absolute owner(s) of this Warrant Certificate (notwithstanding any
notation of ownership or other writing hereon made by anyone), for the purpose
of any exercise hereof, and of any distribution to the holder(s) hereof, and for
all other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined
in the Representative's Warrant Agreement shall have the meanings assigned to
them in the Representative's Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed under its corporate seal.
Dated as of ________, 199__
THE SOURCE INFORMATION MANAGEMENT COMPANY
By:_______________________________________
Name: S. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
Attest:
_______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Assistant Secretary
2
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to purchase __________ shares of
Common Stock and herewith tenders in payment for such securities wire transfer,
or a certified or official bank check payable to the order of THE SOURCE
INFORMATION MANAGEMENT COMPANY in the amount of $___________, all in accordance
with the terms hereof. The undersigned requests that a certificate for such
securities be registered in the name of ______________________________ whose
address is __________________________ and that such Certificate be delivered to
___________________ whose address is ____________________________.
Dated: Signature:___________________________________
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant Certificate.)
(Insert Social Security or Other Identifying
Number of Holder)
Signature Guarantee
-----------------------------------
[FORM OF ASSIGNMENT]
(To be exercised by the registered holder if
such holder desires to transfer the Warrant
Certificate.)
FOR VALUE RECEIVED
hereby sells, assigns and transfers unto
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________________
Attorney, to transfer the within Warrant Certificate on the books of the
within-named Company, and full power of substitution.
Dated: Signature:__________________________________
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant Certificate.)
(Insert Social Security or Other Identifying
Number of Assignee)
Signature Guarantee
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